CHART OF THE DAY: ‘Out Of Control Spending’ Not Really Out Of Control At All

By Brian Beutler

July 4, 2011 7:25 am

It’s taken as an article of faith in D.C. that government has gotten too big, spending is out of control, and Washington has to tighten its belt, just like everybody else. Even President Obama takes this view.

This has meant no small consequences for the federal budget. In the spring, Republicans launched an effort to slash tens of billions of dollars from non-defense discretionary programs — money the government approves every year to pay for social services and other programs — from the federal budget. That campaign almost ended in a government shutdown.

That same sliver of the budget is again under attack in the fight over whether to raise the national debt limit. Republicans want to reduce overall domestic spending and cap it for years going forward, so it can’t exceed a set level. That means as time goes on, the population grows, and the cost of goods and services increases, the government will be spending less and less on the people who rely on these programs over time.

But a close look at the numbers reveals a few important, and frequently overlooked facts. Domestic discretionary spending is a small sliver of the budget. Our deficit and debts can be traced to the fact that spending on entitlement programs and defense has shot up, and tax revenues have plummeted to their lowest level in decades. But spending on domestic discretionary programs has grown much more slowly. And, if you correct for inflation, and for growing population, it turns out we’re spending exactly the same amount on these programs as we were a full decade ago.These numbers come from Democrats on the Senate Appropriations Committee, who are doing their best to guard this turf.

“Although non-defense discretionary spending in nominal dollars has increased, when taking inflation and population growth into account the amount contained in the [2011 budget] represents no increase over what we spent in 2001, a year in which we generated a surplus of $128 billion,” said chairman Daniel Inouye (D-HI) in a prepared statement. “So the right question to ask is: Are we really spending too much on non-defense programs? The answer is clearly no.”

Committee staff put together the below table to emphasize the point.

In the wake of the Bush tax cuts, and the Great Recession, tax revenue has fallen through the floor to near-historic lows. As a percentage of GDP, it’s fallen 24 percent since 2001, and if you correct for inflation, the government is collecting nearly 20 percent less per person than it was a decade ago. At the same time, the population-adjusted costs of mandatory spending programs — driven by Medicare, including its new prescription drug benefit, and Medicaid — have increased by over 30 percent. And, of course, defense spending has skyrocketed. But if you isolate domestic discretionary programs, a decade later we’re spending no more on a per-person basis than we were back then.

The idea here is that since this money is largely devoted to education, health care, and other services that benefit broad swaths of the population, the amount of it should grow roughly with population size. This stands in contrast to defense spending, which is why the committee did not correct defense spending for population growth. We took the numbers and put them in a slightly different context, so you can see by what percentage spending and revenues have risen and fallen on a population adjusted basis over the last decade. Makes it pretty clear what is and is not the culprit of deficits and our supposedly out-of-control spending.